II. Proposed XBRL Voluntary Financial Reporting Program

A. General Comments on the Proposal to Permit Filers to Furnish Financial Information Using XBRL

On September 27, 2004, the Commission proposed rule amendments to enable registrants to submit voluntarily supplemental tagged financial information using the eXtensible Business Reporting Language (XBRL) format as exhibits to specified EDGAR filings under the Securities Exchange Act of 1934 and the Investment Company Act of 1940.1 The voluntary program is intended to help us evaluate the usefulness of data tagging in general, and XBRL in particular, to registrants, investors, the Commission and the marketplace. Nineteen commenters expressed general support for the voluntary program to furnish supplemental tagged financial information using XBRL to help the Commission evaluate the usefulness of data tagging.2 Commenters also generally indicated the potential for the use of XBRL.

Five commenters indicated that the voluntary program will encourage development in critical areas relating to XBRL and establish a feedback mechanism relating to the use of XBRL.3

One commenter suggested XBRL has the potential to lower the costs of producing and consuming business information, increasing the transparency of business reports and facilitating better decision making based on access to information.4

One commenter indicated that the voluntary program would help to reduce costs associated with obtaining and assimilating information from businesses, assist in standardizing international business reporting, catalyze development of XBRL and provide data for academic research.5

One commenter explained that while limitations exist, they believed that XBRL is the most mature technology available for tagging financial data using XML and will improve over time.6

One commenter expressed support for the use of electronically tagged data on the EDGAR system, but indicated that XBRL Specification 2.1 uses complex proprietary technological structure and that the standard taxonomies should be revised to allow more accurate mapping and easier presentation.8

One commenter suggested that the technical complexity of XBRL is unwarranted and unnecessary, suggesting that "XBRL namespaces for items used should be referenced directly in the instance document and the level of conformity to their financial statement calculation structures should be validated there." Additionally, the structure of these namespaces should have a "consistent hierarchical format to allow for comparable data from companies which supply different levels of detail."9

Two commenters offered insight and concerns relating to the voluntary nature of the program.10

One commenter expressed concerns that the voluntary program may involve costly reworking of XBRL implementation as methods and procedures are refined. The commenter suggested full implementation of XBRL by a small subset of registrants as an alternative to the voluntary program, allowing the Commission to assess XBRL, its usefulness, whether it is capable of broad-based application and whether adequate safeguards ensure the data is prepared and disseminated correctly.11

The commenter also noted that mandatory tagging might be resisted by registrants due to concerns about the effect of the disclosure and its wider availability to investors.12

One commenter indicated that while a voluntary program may not reveal all the issues in the development, receipt and processing of XBRL-formatted data and participants may not be indicative of the larger population, given the current reporting challenges faced by companies, a voluntary program was the most practical approach.13

1. Suggested improvements to the voluntary program

Three commenters supported the concept of a voluntary program, but suggested adding structure to the program in order to achieve better results in developing the software and analyzing the program.14

One commenter suggested that while the voluntary program will allow registrants to "explore the technology as extensively or as superficially as they choose," the program may not provide the Commission or the user community with the opportunity to explore the benefits of XBRL-tagged data from an analytical perspective, since such analysis generally requires a comprehensive set of financials over a number of years.15

Two commenters suggested providing for a specific set of XBRL-Related Documents to be provided as EX-100 attachments that would allow software vendors to more easily provide software tailored to elements of the taxonomies relevant to the specified disclosure, making provision of "the same" information easier for volunteers.16

Five commenters offered technical suggestions relating to how the filings should be identified, posted and maintained on the EDGAR system.

Four commenters suggested that participants should be allowed to amend or even withdraw XBRL-Related Documents.17 Commenters indicated that amendments or deletion would be helpful if volunteers found errors in the documents (NYSBA, AICPA) or wished to revise the nature and extent of the data tagging in the document in order to maintain consistency (E&Y). One commenter suggested that any amended XBRL-Related Document should be required within a short period of time after the error or change was determined to be made, i.e. 5 business days.18

One commenter suggested that where a filing is comprised of only the XBRL-Related Documents, if the document fails validation, the entire filing should be suspended instead of leaving a cover page with no attachment.19

One commenter suggested that the Commission make available the validating parser and customized routines that will be used to validate XBRL submissions.20

2. Encouraging Participation

Seven commenters provided suggestions to the staff on how to encourage participation in the voluntary program.

Eight commenters suggested that the Commission offer education and training to encourage participation, including suggestions such as informing the public about the Commission's intentions with respect to XBRL, assisting companies with implementing the use of XBRL-tagged data in their filings, staffing of a technical help desk and creating an XBRL advisory board.21 Two of these commenters suggested periodic feedback to XBRL International and other organizations involved in the development of XBRL.22

Two commenters indicated the necessity of sufficient liability protection.23

One commenter indicated that the upfront investment in XBRL training and software that would be required for the voluntary program and the costs of implementing Section 404 of Sarbanes-Oxley will limit the size and number of participants in the voluntary program.24

B. Comments on the Type of Information to be Furnished in the Voluntary Program

Commenters provided suggestions relating to the information and Form types that should be included in the XBRL-Related Documents, but differed in their support for varying levels of tagging. Three commenters suggested limiting the type and substance of filings in order to have more consistency relating to the data provided and to ease implementation of the program.25

One commenter suggested limiting the optional filings to only Forms10-K and 10-Q in the early stages of the voluntary program to ease implementation for registrants and software providers.26

One commenter suggested initially limiting tagging to the annual and interim financial statements and Management's Discussion and Analysis related to those periods because standards have not been developed for the other information.27

One commenter suggested limiting the tagging to the financial statements and requiring participants to furnish the same statement each time they submit an XBRL instance in order to have consistent datasets across participants and time periods.28

One commenter indicated its belief that "the market would find automated handling of fully coded legitimate Form 8-Ks to be of more immediate value than fully coded financial statements" suggesting such disclosure would better serve to test and analyze XBRL.29

In order to provide more "comprehensive and integrated analysis of the financial information including the interrelationship of information on different statements," three commenters suggested requiring volunteers to furnish all of their basic financial statements.30

1. Inclusion of notes to the financial statements in XBRL-Related Documents

Commenters generally supported flexibility for issuers relating to their XBRL-Related Documents. Seven commenters supported additional flexibility permitting volunteers to provide or omit the notes to the financial statements in order to encourage participation in the voluntary program.31 Commenters supporting this additional flexibility noted that:

taxonomy development of the primary or basic financial statements is of higher quality and more mature than the notes.32

including the notes to the financial statements in full detail using XBRL would require extensive taxonomy extensions.33

Four commenters suggested that volunteers be permitted, but not required, to submit XBRL-tagged data for the notes to the financial statements.34 Additionally, four commenters suggested that if the Commission required tagging the notes to the financial statements, volunteers should be given flexibility relating to the level of detail at which the notes are tagged.35 In contrast two commenters suggested that the notes to the financial statements should be included in the XBRL-Related Documents.36 However, these commenters also noted that the Commission may wish to limit the notes required to be tagged (PWC) or allow the use of a single tag for the entire set of notes (CEFASD). The commenters also noted that additional issues would be created due to the lack of development of the taxonomies for the notes and that requiring notes to be tagged might reduce participation in the program.37

2. Tagging of data not included in the financial statements

Six commenters suggested allowing tagging of MD&A based on the current rudimentary taxonomies provided in the acknowledged Specification 2.1 U.S. GAAP taxonomies, or more fully developed future taxonomies.38 Four commenters39 suggested further developing MD&A tagging, with three40 suggesting a more structured form of MD&A to support the drive toward enhanced business reporting and one41 indicating that MD&A is not ready to be tagged in the current voluntary program.

Three commenters expressed strong support for tagging other non-financial data using XBRL, but recognized the current limitations of the current XBRL specifications and taxonomies.42 Noting this limitation, one commenter suggested that the Commission should take a leadership role by providing a consistent approach for include text within the XBRL specification, suggesting the use of "string data captured as XHTML markup."43

C. Development and Adequacy of the Standard Taxonomies

1. Development of the standard taxonomies

Commenters generally believed that the standard taxonomies would be sufficiently developed to be used in the voluntary program. Seven commenters indicated that they believed the XBRL US standard taxonomies are sufficiently developed.44 Four of these commenters indicated their belief that the taxonomies could cover up to 90% of the disclosure found in most companies' public filings.45

One commenter stated that the US draft taxonomies should cover 90% of the disclosure for 90% of public companies by 2005.46

One commenter indicated that the "level of due process involved in preparing" taxonomies and industry extensions based on the U.S. Financial Reporting Taxonomy Framework was advanced enough to produce taxonomies adequate for purposes of the voluntary program.47

Two commenters indicated that while they believed that the standard taxonomies are sufficiently developed for the voluntary program, the voluntary program will serve to enhance and develop the taxonomies by providing feedback from their use.48

Two commenters expressed concern about the complexity of the XBRL standard, suggesting that XBRL Specification 2.1 and the related taxonomies create what is essentially a "proprietary technological structure" necessitating difficult to use and costly specialized software tools to create, access and validate tagged data.49

One commenter provided detailed taxonomy development guidelines and a draft marked revision to the C&I standard taxonomy in order to simplify the provision of electronically tagged data useful to end users, including revisions to restructure taxonomies to breakdown items in a hierarchical format without alternative classifications for easier comparability and to allow for the validation and legibility of a company's level of adherence to the standard taxonomies by end users without high-level XBRL processing.50

One commenter suggested that the complex XBRL standards may make the program difficult and costly and may give rise to errors in preparation and dissemination of financial data. The commenter suggested directing the PCAOB to participate in the development and implementation of XBRL.51

2. Adequacy of the standard taxonomies.

Commenters varied on their opinion of what would constitute an "adequate" standard taxonomy. Six commenters focused on whether the taxonomies are able to provide beneficial and useful information to the market.52

One commenter believed that a standard taxonomy would be "adequate" if it provided beneficial and useful information and volunteers could represent at least 75% of the data in their primary financial statements with relatively few extensions.53

Five commenters listed qualitative and quantitative factors to be considered, including two suggesting that a standard taxonomy should tag over 90% (IMA, AAA) of the information received by the Commission and another commenter suggesting the standard should be set at 80% (MSFT).54

One commenter suggested that the focus should be on the ability to integrate extension elements into the standard XBRL components rather than the adequacy of the standard taxonomies.55 One commenter suggested that the industry standard taxonomies should be as comprehensive as possible, requiring only minor extensions to meet each company's unique requirements.56

3. Use of additional standard taxonomies

Commenters had varied opinions on the use of additional standard taxonomies beyond those identified in the proposing release. Three commenters indicated they were unaware of any other standard taxonomies that had been sufficiently developed for use in the program.57 One commenter indicated that non-XBRL standard taxonomies would be less than fully compatible with the XBRL U.S. standard taxonomies and would therefore be less useful in making inter-company comparisons.58 One commenter urged that use of additional standard taxonomies be encouraged as long as the XBRL International Financial Reporting Taxonomy Architecture (FRTA) guided the quality of the taxonomies.59 One commenter suggested that the Commission investigate developing additional taxonomies for certain header information and Form 8-K and similar forms.60

4. Adequacy of taxonomy builder software

Four commenters indicated their belief that the taxonomy builder software provides adequate functionality for the voluntary program, but that the software requires further development for satisfactory end-user use.61

Two commenters noted a lack of cost-effective "instance building tools" for extensions, but believed vendors are building such tools.62

Four commenters indicated that the taxonomy builder software is difficult and complex, requiring substantial XBRL expertise to be used efficiently.63

Two commenters indicated that they expect additional software making the process more "user friendly" would come to market within the next year.64

D. Participation in the Voluntary Program

One commenter suggested the voluntary program "should be open to all interested participants.65

Seven commenters suggested that restrictions based on size or specific industry are unnecessary and could reduce the usefulness of the voluntary program.66

Other commenters acknowledged some limitations, generally relating to the development of taxonomies.

Two commenters supported limiting the voluntary program to the specified standard taxonomies and form types for Exchange Act and Investment Company Act filings as indicated in the Proposing Release.67

Two commenters supported limiting the voluntary program to the specified taxonomies and form types, but suggested allowing volunteers to furnish XBRL data with Securities Act filings.68

One commenter supported initially limiting the voluntary program to the standard taxonomies finalized by XBRL International pursuant to due-process procedures and suggested that the Commission provide guidelines and expectations in the adopting release relating to the extent and type of tagging expected and to caution volunteers that it may not be practical to volunteer if tagging will require "considerable use of extensions."69

1. Inclusion of foreign private issuers and governments

Four commenters supported allowing foreign private issuers and governments who use non-U.S. GAAP standard taxonomies to participate in the voluntary program.70

Two commenters supported the inclusion of foreign entities, but noted that a permanent location for the publication of any non-U.S. GAAP taxonomies should be provided and volunteers should be required to provide a reconciliation to U.S. GAAP.71

One commenter voiced general support for a taxonomy linking U.S. GAAP and IFRS, but did not voice an opinion on whether foreign issuers should be allowed to participate.72

Some commenters were more cautious about including foreign issuers.

One commenter suggested allowing foreign registrants using non-U.S. GAAP to participate in the voluntary program could add complications to the program, requiring publication of the foreign taxonomy at a permanent location and provision of an extension reconciling to U.S. GAAP.73

One commenter suggested limiting participation to U.S. GAAP taxonomies, but supported considering expansion to include IFRS taxonomies at a later date.74

One commenter suggested allowing additional participants such as foreign private issuers only after XBRL U.S. finalized the additional taxonomies.75

E. Use of Extensions to the Standard Taxonomies

Commenters generally supported the use of extensions to the standard taxonomies to provide the flexibility to companies to add financial information specific to the company that is not included in the standard taxonomies. Nine commenters suggested that taxonomy extensions would be used or would be necessary for companies to provide their financial information and financial reporting concepts not found in the standard taxonomies.76

Three commenters suggested that the Commission should recommend or mandate that extensions meet the requirements of the FRTA to provide quality standards for the extension taxonomies, thereby increasing the usability of the information by consumers while still allowing companies flexibility in their reporting.77

One commenter suggested that extension taxonomies should be required to meet the XBRL 2.1 Specification, the FRTA and be compliant with U.S. GAAP.78

Two commenters suggested that extensions will be necessary until the taxonomies are fully developed due to "a lack of standardization, clarity of definition and consistency of usage." The commenters suggested that company specific extensions will "taper off as taxonomies mature and industry-level extensions are developed."79

One commenter noted that the process of extending taxonomies must be efficient and expedient allowing modifications of the core taxonomies as common deficiencies are discovered and providing guidance on how to modify core taxonomies so they can be maintained over time.80

One commenter indicated that the major test of the voluntary program would be the ability of companies to integrate non-standard data into effective XBRL creation, validation, presentation, calculation and reference routines.81

1. Comparability of XBRL tagged data that use extensions

Comments were mixed as to whether the data would be comparable if extensions were permitted in the voluntary program. Three commenters suggested that taxonomy extensions should not harm comparability.82 One commenter suggested that the voluntary program is the appropriate place to test the issue of comparability of extensions.83

One commenter suggested that extensions enhance "the comparability of financial information among companies" by allowing the registrant to tailor the U.S. GAAP taxonomy to match their reported financial information and assist users in determining how the financial statement line items were compiled.84

One commenter indicated that extensions should not negatively affect comparability as long as appropriate quality standards are enforced.85

Two commenters took a more complex view in noting that while there is a "presumption of comparability" under the existing reporting concepts, such as GAAP, the "presumption of comparability" may not be completely valid as the current reporting principles do not fully address comparability concepts at an individual reporting element level.86 The commenters suggested that many company extensions would have "little impact on the comparability of data," but noted that the introduction of new elements through company specific taxonomies could impair comparability.87

Four commenters noted that taxonomy extensions are prepared by filers and provide insight regarding where the extension diverges from the core taxonomy.88

One commenter stated that, "In all cases where comparability is hampered via the company extension, the company extension itself provides a mechanism to view the differences between the company disclosure." Thus the extension is a "transparent tool" that helps companies and investors understand changes in the nature and context of reported information.89

Another commenter recommended including a letter from management describing management's basic decisions involving the creation of the XBRL-Related Documents and the use of any adjustments to the taxonomies.90 Another commenter indicated that companies should be required to provide a comprehensive discussion explaining the need for the extension.91

2. Effects of taxonomy extensions on confidentiality

Seven commenters indicated that they did not believe there are confidentiality concerns regarding extensions provided for public distribution because the extensions provide tags for concepts and disclosure already in a company's public filings.92

3. Risks of standardization

Two commenters noted risks relating to requiring standardization of taxonomies. One commenter suggested that requiring the use of a standard taxonomy might impair comparability due to the combination of data under standard captions and the resulting loss of linkage to the financial statements.93 One commenter suggested that filers may change their reporting practices to match the taxonomies.94

F. Similarity of XBRL Data to Officially Filed Company Disclosure

In the proposing release, we proposed that the XBRL-Related Documents must reflect the same financial information, prepared in accordance with U.S. GAAP, as appears in the complete set of financial statements included in the official filing. Comment was provided on both the consistency of the XBRL data with the data in the official filing and the extent of the data to be included in the XBRL-Related Documents. One commenter suggested that the program "is the best place for the Commission to determine its ability to validate that issuers are conforming to a requirement" and to determine the conformance between the official statements and the associated XBRL instances.95

1. Consistency of the data with the official filing

Five commenters expressed concerns about requiring the information in the XBRL-Related Document reflect "the same" information as in the official filing and suggested altering or clarifying the language to allow flings that are "consistent with" or "substantially the same" as the official filing.96

One commenter believed that while "it is appropriate to deem the information in the XBRL-Related Documents the same as that in the official filing...based on the principle that changing how content is presented does not change the underlying content." However, the commenter recommended using the term "consistent with the official filing" due to inherent differences in XBRL-tagged information and information contained in static documents.97

One commenter suggested that the XBRL filing could differ immaterially from the official filing and a requirement that the "information be consistent" would be sufficient.98

One commenter suggested that the requirement "should be based on accuracy," such that the tagged data is "substantially the same" as the corresponding information in the official filing.99

One commenter indicated that the information content should be the same, but that the detail and format of the information should be allowed to vary.100

Three commenters believed requiring the information in the XBRL-Related document reflect "the same" information as in the official filing was fair.101

2. Extent of the data to be included in the XBRL-Related Documents

Five commenters suggested that while information should be complete, the Commission should provide flexibility relating to the level of detail for submission of XBRL-Related Documents, allowing volunteers to provide summary or other more limited information.102

One commenter suggested that volunteers should be allowed to provide "piece-meal" disclosure in XBRL as long as appropriate warnings are included.103

One commenter suggested allowing subsets of financial data, but indicated they would have diminished value and that "full and robust XBRL filings" should be encouraged.104

One commenter suggested that volunteers should have flexibility, but recommended that all of a volunteer's financial statements should be furnished using XBRL and the Commission should allow volunteers to furnish additional information such as MD&A and notes to the financial statements.105

One commenter expressed a concern that the requirement for providing the "same information" could be interpreted to allow partial financial presentations of the same information in the XBRL-Related Documents. The commenter suggested the XBRL-Related Documents should be "limited to the complete presentation of information corresponding to the financial statements or MD&A included in the related official filing."106

3. Liability concerns

A number of commenters expressed concerns over liability if the "same information" is required to be in the XBRL-Related Documents as in the official filing. Four commenters suggested providing limited liability.107 Two commenters suggested that the information should be allowed to have some variation as long as appropriate disclaimers and warnings are included with the XBRL-Related Documents.108

One commenter suggested a safe harbor deeming information in XBRL reports to be"consistent with the official filing" where significant events occur between the filing of the official report and the XBRL report.109

G. Timing and Methods of XBRL Data Submissions

1. Timing of data submissions

Nine commenters suggested that volunteers not be required to submit XBRL data at the same time or shortly after their official filing since deadlines could deter participation.110

Two commenters noted that volunteers may encounter difficulties implementing the voluntary program and that specific timing requirements could be difficult to meet.111

Three commenters suggested voluntary XBRL filings be sent within a "reasonable time" after the official submissions suggesting times such as 30 (Blastradius), 90 (IMA) or 60 to 90 (AAA) days.112

One commenter suggested that, as the tools and process mature, XBRL data could be required to be delivered at the same time as the official filings.113

One commenter suggested that, once a company has begun using XBRL, there would be no reason that the XBRL-Related documents could not be filed within a specified time period after the official filing.114

2. Methods of data submission

Several commenters made suggestions about how XBRL-Related Documents should be identified or filed.

Two commenters suggested that registrants identify which filing an XBRL submission corresponds to for better usability of the data.115

Two commenters supported providing a distinct Form 8-K item number for the XBRL-Related Documents.116

One commenter expressly supported our proposal not to require consistent participation in the voluntary program.117

One commenter noted the importance of locating XBRL-Related Documents and suggested modifying the Form type reference or posting a spreadsheet of XBRL submissions to ease identification.118

3. Use of a standard template

Commenters were generally unsupportive of the development and use of a standard template to render XBRL tagged data into human readable form. Five commenters suggested that the Commission should not develop and maintain a standard template for rendering XBRL information in human readable form with two indicating their belief that it was infeasible (IMA, KPMG).119 One commenter suggested that a Commission-provided template for rendering XBRL data would not be the preferred method of rendering, but could be useful as a default during the learning process.120

One commenter stressed the need to avoid a fixed-field approach to the use of XBRL.121

One commenter was concerned that requiring a standard template could move the program towards standardized reporting or dissuade companies from using extensions, limiting the usefulness of XBRL.122

One commenter suggested that a "display service" was unnecessary and a standard template would be inadequate for documents that use extensions, failing to display most documents accurately.123

One commenter suggested that a standard style sheet would be of no value in testing the ability of XBRL instances to replicate the detail in their official financial statements as they would be unable to accommodate extensions.124

In contrast, a few filers supported the concept.125 One commenter supported the idea of an XML style sheet application that renders the data in human readable form.126 Another commenter suggested that while the use of a standard template would present "unique technical issues," the ideal solution would be to use a "server-side XBRL processor optimized for the transformation requirements of XBRL," since a typical XSLT rendering process would be difficult and could lead to incorrect information being rendered or unacceptable performance bottlenecks.127 Another commenter suggested a standard template would increase the use of the output.128

One commenter suggested that if the Commission chose to implement a fixed reporting template or to prohibit the use of extensions, a standard template would make sense. The commenter further suggested that the Commission could use this as a fall back position if the wider testing of XBRL were to fail because the technology was not ready, too expensive or too complex for widespread use.129

4. Use of a volunteer provided template

Comments were mixed on whether to allow volunteers to provide their own submissions. Three commenters indicated a preference for accepting volunteers' submissions for rendering mechanisms.130 Two other commenters acknowledged the potential difficulty of providing a standard template, but did not support allowing volunteers to submit their own template, citing potential issues with submissions and security.131

H. Liability and Attestation Standards for XBRL Data

1. Certification and attestation of XBRL-Related Documents

Eleven commenters expressed concerns about requiring certifications, auditor opinions and attestations.132 These commenters supported the Commission's proposal that certifications under Exchange Act Rule 13a-14 and 15d-14 and Investment Company Act Rule 30a-2 and auditor attestations of XBRL-Related Documents should not be required for purposes of the voluntary program.133

One commenter requested further clarification that "XBRL-Related Documents are not encompassed by the certifications regarding disclosure controls and procedures and internal controls" and that the XBRL-Related Documents furnished in the program "are excluded from the reports and assessments required in connection with Section 404 of the Sarbanes-Oxley Act."134

One commenter suggested that the furnished XBRL-Related Documents "fall outside the scope of the assessment and reporting on internal control over financial reporting" required under Sarbanes-Oxley Section 404.135

One commenter suggested expanding the "good faith and reasonable" standard (negligence standard) proposed for the program "in light of the voluntary nature of the program, development stage of the technology, and issues about reliability and potential liability" to provide "protection from liability in the absence of a showing of actual knowledge of the elements of fraud." A standard similar to that applied to forward-looking information in Sections 27A of the Securities Act and 21E of the Exchange Act should be used.136

One commenter contradicted the general consensus and suggested that "the core financial statement should be presented in XBRL as the registrant intended" and that any XBRL-data included in Commission filings should bear the same attestation of the registrant's accountant.137

While agreeing with the general consensus that attestation not be required, four commenters suggested that the Commission should allow volunteers to have their XBRL-Related Documents certified or attested to.138 Four commenters expressed concerns relating to the development of attestation and audit standards for XBRL data, ranging from objections to using to using attestations during the voluntary program to suggestions relating to what those standards should be based upon.139

One commenter suggested that it would be inappropriate for auditors to attest to XBRL-tagged data because the taxonomies were still under development and the PCAOB had not addressed the AICPA's XBRL attest interpretation.140

One commenter suggested further developing audit standards relating to XBRL and Internet documents.141

Two commenters suggested that registrants consider using the guidance for attestation on XBRL Instance documents in SSAE No. 10 AT Section 101.142

One commenter noted that while the AICPA has issued an interpretation relating to standards for attest engagements on financial information included in XBRL-Related Documents, the PCAOB has not adopted those standards, limiting the value of an attestation based on those standards.143

2. Inclusion of audit opinions and review reports from official filings

Two commenters suggested prohibiting the inclusion of audit opinions and review reports included with the annual or quarterly financial statements in the body of the official filing from the XBRL-Related Documents.144 One commenter suggested that their inclusion "could result in the erroneous interpretation that the auditor is attesting to the accuracy of the XBRL-Related Documents."145 One commenter suggested there was a concern that users could misinterpret the reports as providing assurances as to the "propriety of the tagging."146

3. Management responsibility and verification

Two commenters suggested that management has a responsibility to ensure that the tagging of XBRL documents submitted under the voluntary program is accurate.147

One commenter suggested that management should be encouraged to provide a letter with its XBRL-Related Documents disclosing: that management is responsible for ensuring that the XBRL-Related Document is appropriately tagged; the source of the tagged information; the extent of tagging used; whether extension meet the XBRL International technical specifications; and that investors should continue to rely on the official version of the filing.148

One commenter suggested that officers should be required to certify XBRL data in the future and that such certification should be based on the auditor's report on the company's financial statements that are carried over in the XBRL-Related Documents and the accuracy of which should be easily verified through mechanical validation.149

4. Liability standard for XBRL-Related Documents

Nine commenters supported a lesser liability standard for the voluntary program than deeming the XBRL-Related Documents filed for liability purposes, believing a lesser standard would encourage participation in the voluntary program.150

Five commenters suggested that considering the XBRL data to be "furnished" and not "filed" was appropriate.151

Two commenters specifically noted that the Commission should provide a safe harbor for XBRL-Related Documents.152

One commenter suggested cautioning investors that the system and XBRL are still being tested.153

I. Investment Companies

One commenter suggested that the Commission provide maximum flexibility for investment companies. The commenter suggested that timeliness or completeness of the XBRL-Related Documents not be required and that proposed Rule 401 be amended to allow participants to furnish XBRL versions of: a statement of net assets; a statement of changes in net assets; or a statement of operations.154 The commenter noted that requiring a complete set of financial statements would require the inclusion of the notes to the financial statements which "may not be sufficiently developed" and may require registrants to develop substantial taxonomy extensions, discouraging participation. The commenter suggested permitting investment company participants to omit footnotes and supplemental schedules from their XBRL-related financial information.155 The commenter also suggested allowing participants to file XBRL-related information in an amendment to the original Form N-CSR or Form N-Q within a "reasonable time" after the original filing (i.e. 60 days).156 The commenter also suggested allowing investment companies to file for the sole purposes of adding XBRL-related financial information without re-certifying the filing.157

J. Requests for Comment on Commission Analyses

1. Paperwork Reduction Act

Commenters provided limited comment on the Paperwork Reduction Act Analysis.158 The commenters indicated that our burden analysis focused on current manual reporting processes and did not account for the burden related to automating the process.

One commenter suggested that cost estimates should reflect the set up and re-engineering costs and balance the cost reductions of the expected efficiency gains from automating the reporting process.159

One commenter indicated its belief that the cost to tag information will vary widely and reflect tagging occurring after preparing a company's financial information rather than embedding the tagging in an automated system.160

One commenter, without providing further detail, suggested that we underestimated the investment in training and workload to produce the first filing, and agreed that less effort would be required in subsequent filings while acknowledging additional work whenever extension changes or changes to the taxonomies or software occur.161

Two commenters further indicated that our burden analysis did not account for the efficiency gains from automating the process.162 Both commenters indicated their belief that, over time, the program will reduce reporting costs, internally and externally, by enhancing reporting and analysis processes through the use of XBRL enabled tools.163

2. Initial Regulatory Flexibility Analysis

Commenters provided limited comment on the Initial Regulatory Flexibility Analysis.164 They generally believed that the impact of the proposed rules on smaller companies would be difficult to quantify, but that there was no need to provide additional exemptions to such companies in the early stages of the voluntary program.165 The commenters indicated their belief that smaller entities may defer taking advantage of the voluntary program until after the year-end reporting season (i.e. file quarterly reports) because of Sarbanes-Oxley Section 404 compliance concerns or until software makes XBRL instance creation easier (AICPA).166

In seeking to determine the impact, one commenter believed that registrants with "relatively lower market cap and analyst coverage" should expect the greatest benefits from participation in the voluntary program because XBRL will make their data easier to access and use by investors and analysts.167

3. Cost-Benefit Analysis

Commenters sought to assist our cost-benefit analysis by providing costs and benefits qualitatively, but were unable to supply additional quantitative data for an analysis.168 One commenter suggested that costs could vary widely, but that the voluntary program would be useful in determining costs of implementing XBRL.169 Other commenters indicated costs to be expected by volunteers on a qualitative basis.

One commenter indicated that filers will incur costs through training relating to XBRL and by hiring consultants to assist in preparing XBRL, developing in-house XBRL expertise and purchasing software or hiring a company with XBRL expertise to prepare and file XBRL-Related Documents for them.170

A different commenter indicated that tangible costs of the program would include software and personnel expenses to implement and support XBRL, training costs, costs of preparing an additional set of financial information using XBRL and indirect costs caused by productivity shifts as personnel focus on implementing XBRL.171

This commenter further indicated a possible additional cost to the capital markets if the XBRL taxonomies are not complete (citing a study that found the 2.0 version of the C&I taxonomy to be a poor fit for companies current reporting practices), forcing the capital markets to process two sets of data when making economic decisions.172

Commenters generally believed that the voluntary program will provide numerous benefits by automating the reporting and information gathering processes.173

Two commenters suggested that the program may help improve internal controls and enhance companies' internal reporting processes.174

Two commenters suggested that the potential benefits of XBRL include faster processing of financial information, greater transparency, better analysis and higher quality disclosure.175

Two commenters cited to a Korean KOSDAQ study showing a measurable increase in foreign ownership of companies on the Korean stock exchange that began publishing their results using XBRL.176